Stock picking ideas.

You are done with mutual funds and index ETF. Or, they have their specific role in your portfolio, but you want to actually own “businesses” instead of a “financial product” that tracks it.

Which stock should I buy ?

We should see investing in individual stock as being “owner” of the company. You want a profitable business that will maximize your return on investment.

In this world, if you provide “value”, someone is willing to trade money for it. For example, would you rather keep $1000 or trade it for a smartphone?
The smartphone will make your life more convenient and efficient (Alarm, internet, messaging, google search, video, etc.)

How do I get start?

I came up with a good exercise to find companies that “makes sense” to you. It’s a good starting point. From there, you can slowly progress to company with specific niche industry.

Step 1: Look at things that “brings value” to your life.

How do they give value to your life?

How do they make your life better?

« It’s not about money. It’s about making the world a better place. »

Example:

  • Dentist/ Optometrist/ Doctor: They do things that I can’t do on my own to “heal” me.

  • Grocery store: access food ingredient at low cost, convenience of location, don’t need to start my own farm to feed myself

  • Pharmacy: provide medics and consulting

  • Electricity company: produce/ distribute electricity

  • Home Internet: use wifi in my location and alone, not sharing it, cheap price,

  • Phone provider: phone calls, Data (connect to Internet 24/7), cheap offer

  • Bank: keep your money safe + access anytime, borrow money, credit card, line of credit, mortgage, etc.

  • iPhone + MacBook: save time, productive tools, convenient, reliable

  • Discount brokerage: trade stock at low fees from your home

  • Gym: save me money from buying all equipments

  • Water kettle: boil water, save time, portable

Step 2: “Look at where you spend your money consistently over 4 months.’’

  • Rent

  • Grocery and pharmacy

  • Internet/cellphone

  • Water/ heating/ Electricity

  • Health Insurance

  • Transportation: metro pass

  • Order stuff online

  • Haircut, gym membership

  • Restaurants

  • Pizza

  • Uniqlo underwear.

Step 2.5 (Bonus): Associate a public company with your spending

  • Rent: Residential REITs (CAPREIT CUF-UN.TO), InterRent REIT (IIP-UN.TO)

  • Grocery and pharmacy: Loblaw (L.TO), Metro (MRU.TO)

  • Internet/cellphone: Rogers (RCI-B.TO), Bell Canada (BCE.TO), Telus (T.TO), AT&T (T-US)

  • Water/ heating/ Electricity: ZUT.TO (Utilities etf)

  • Health Insurance: Manulife (MFC.TO), Sunlife (SLF.TO), Great-West Life (GWO.TO),

  • Transportation: Canadian National Railway (CNR.TO), Canadian Pacific Railway (CP.TO), Air Canada (AC.TO)

  • Order stuff online: Amazon (AMZN-US), Shopify (SHOP.TO), Ebay (EBAY-US), Esty (ETSY-US), Alibaba (BABA-US)

  • Restaurants: Restaurant Brand (QSR.TO), MTY food (MTY.TO), Macdonald’s (MCD-US), Starbucks (SBUX-US), Chipotle Mexican Grill (CMG-US)

  • Pizza: Pizza pizza (PZA.TO), Domino pizza (DPZ-US), Pizza Hut (YUM-US)

  • Uniqlo: Fast retailing (FRCOY-US)

Step 3: Look at things you use daily/weekly: 
*You don’t pay for it.

  • Social media: Facebook, Instagram, Twitter, Snapchat, LinkedIN,

  • Messaging app: WeChat, Whatsapp, Line, Skype,

  • Watch video: YouTube, Netflix,

  • Dating apps: Tinder, Tantan, Coffee meets Bagel

  • Online storage: Dropbox, GoogleDrive

  • Email: Outlook

  • Working app: Words, Excel

Step 3.5 bonus: Associate a public company to it

  • example: Facebook, Twitter, Snap, Microsoft, Line, Tencent holdings, Google, Netflix, MatchGroup, Dropbox,

Step 4: Look at your biggest purchase in your life:

  • Travel (flight tickets)

  • Computer, laptop, smartphone

  • Car, House, stocks

  • Education

Step 5: Choose your battle.

At this point, you should have lots of stock ideas for your portfolio.
You need to decide if you want to use an ETF to track a specific industry/ sector or choose the best company in that sector.

« It’s not about money. It’s about making the world a better place. »

SimpleLifeBalancing.

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